New 95 per cent mortgage scheme launches

A new government-backed mortgage scheme will help first time buyers or current homeowners secure a mortgage with just a five per cent deposit.

First announced by Chancellor Rishi Sunak at the Budget, the scheme will help first time buyers or current homeowners secure a mortgage with just a five per cent deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners. The government will offer lenders the guarantee they need to provide mortgages that cover the other 95 per cent, subject to the usual affordability checks.

Since 2010, more than 663,000 households have been helped into home ownership through government schemes, but when asked, 69 per cent of private renters and 63 per cent of those living at home who had looked into a mortgage said they cannot find many mortgages with a low deposit.

The new scheme is now available from lenders on high streets across the country, with Lloyds, Santander, Barclays, HSBC and NatWest launching mortgages under the scheme from 19 April and Virgin Money following next month. The intervention comes as new figures published by the government show a greatly increased desire for home ownership and a sharp reduction in 95 per cent mortgage availability over the past year.

Housing Secretary Robert Jenrick said: “For too many people, no matter how hard they work, home ownership can seem out of reach. One of the biggest divides in our country has been between those who can afford their own home and those who cannot. That’s why we are determined to do everything we can to help hard-working families and prospective first-time buyers get their feet on the housing ladder in an easy and affordable way, to level up this country.

“The new mortgage guarantee scheme which comes into effect today will give providers the confidence to lend and help families and young people get on the property ladder without the prohibitive burden of a large deposit. Despite the challenges faced over the past year, the government has intervened to protect jobs, support builders and buyers to help keep the housing market healthy. Today’s 95 per cent mortgages launch further strengthens our commitment to build back better from the pandemic.

“In recent years we’ve reversed the trend and seen a positive increase in owner-occupiers. We’re determined to build on this through the range of flexible ownership options which help ensure home ownership is achievable. We want to match the ambitions of aspiring homeowners up and down the country. Together we can turn ‘Generation Rent’ into ‘Generation Buy’.

In 2019, a pledge to build 300,000 new and attractive homes a year was announced with an investment of over £12 billion in affordable housing over the next five years.